Guest Article & Analysis

It Ain’t Over Til It’s Over, or How to Convert a Successful Mediation to a Done Deal

By:  Joan S. Morrow, Attorney and Mediator

You and your client settle a case at mediation.  Great!  But, alas, the end of the mediation marks the beginning of weeks or sometimes even months of protracted negotiations over the language of the settlement agreement or, worse yet, over issues that were never discussed or were inadequately clarified at the mediation.  Generally, these negotiations will be with the other side; worse is when the negotiations are between you and your client.  As the days and weeks pass without a final settlement document, your client is increasingly unhappy with you.  This unhappiness sometimes stems from the fact your “meter” is still running; at the very least, it’s a consequence of the fact that the client has not attained the closure and finality that they thought they’d achieved at mediation.

Some Solutions:

1.    Well in advance of the mediation, get a clear understanding from your client of what non-monetary terms should be part of a resolution.  This especially applies to cases involving issues beyond dollars.  Don’t assume that your client will have all these items in mind; in some cases, you will need to really quiz your client to make them think through what a final settlement should look like.  If there is to be an ongoing business relationship post-settlement or settlement terms requiring future action, your complete fluency with what will be required is imperative.

2.    As soon as you have an understanding with your client, you need to communicate it to the other side.  Unless there are strategic reasons not to do so this should be done before mediation.  There are several ways this can be done:

a)    Prepare a draft settlement agreement incorporating all desired terms.  If you’re worried that this gesture may be misinterpreted as an excessive desire to settle, state it’s being done to alert your opponent to issues of concern and to save time at the mediation session.

b)    Make a settlement demand, specifying all desired terms.  If you’re on the defense side, such that a “demand” may not seem in order, send a letter identifying the terms that will be important to your client if a resolution is reached. 

c)    If a pre-mediation demand or draft settlement agreement is impractical because the structure of the deal will need to evolve at the mediation, prepare draft language for important terms on separate sheets of paper so they can be shared at
the mediation, as appropriate.

3.    At the mediation session, don’t just focus on dollars; negotiate all terms as you make your way through the negotiation.  Quite frequently, parties and counsel who are pessimistic about the prospects for settlement will say, “Let’s see if we have any chance of getting close on the money…THEN we’ll worry about the other terms.  This strategy often leads to several unintended and certainly undesirable consequences:

a)    The parties miss the opportunity to achieve positive momentum from the small successes that come from agreement on some non-monetary terms or those of secondary importance.  More important, some of those non-monetary terms have more value to the other side than you may appreciate; your  early agreement to them may make it easier to get closer on dollars.

b)    The 11th hour revelation of important, non-monetary terms makes their negotiation more difficult because parties may be more tired, more frustrated and less clear in their thinking due to the tug and pull of the negotiations.  Sometimes, a party may feel “sandbagged” by having made substantial monetary movement, only to discover that the parties remain very far apart on non-monetary terms and that significant leverage has been lost by the status of the monetary negotiations.

4.    Recognize that almost every term needs to be negotiated, not merely assumed.  This seems obvious, but I have often seen that the following terms are not articulated at mediation; when they show up for the first time in a draft Settlement Agreement, they invariably produce consternation and sometimes non-agreement:

a)    Mutuality of terms, like releases, confidentiality and non-disparagement agreements.

b)    Scope of releases.

c)    Liquidated damages or shifting attorneys’ fees provisions and the circumstances for their operation in the event of a breach of the Settlement Agreement.

d)    Characterization of the settlement proceeds or the allocation between fees and proceeds that should appear in the Settlement Agreement, as well as any indemnification terms.

e)    In employment cases, plaintiff’s agreement not to reapply.

f)    Mandatory ADR (mediation or arbitration) to deal with post-settlement issues or alleged breaches of the Settlement Agreement.

g)    Specific scope and terms of non-disparagement agreements or non-competition agreements.

h)    Specific language of negotiated statements or scripts, joint press releases or letters of recommendation.

i)    Confidentiality, specifically what is to be kept confidential (e.g., terms of settlement, allegations or facts of claim, fact of settlement, etc.), who is covered and who is excepted.

j)    In summary, in some negotiations, almost everything needs to be specified and not assumed, other than severability, non-admission of liability and, generally but not always, choice of law terms.

5.    Learn to identify cases with complicated issues or parties with significant emotion which may benefit from two mediation sessions rather than a one-day marathon.  Identifying the proper mediation structure for a particular case is an important skill for both professional mediators and advocates in mediation; ‘Rome wasn’t built in a day’, and some settlements aren’t either.  In many cases, the process and the parties will benefit from a 1-1/2 or 2-day mediation with sessions of reasonable length.  This format gives parties time to express and get past their feelings about the case and move on to the settlement issues.  In some other cases, it gives the parties time to reflect on the deal crafted thus far and to refine their thinking, so as to arrive at a better, more comprehensive settlement.

Multiple sessions of sensible length do not add to the expense of mediation.  For example, a mediation that lasts from 8:30 a.m. to 6:30 p.m. on Day I and then from 8:30 a.m. to 2:00 p.m. on Day II is not much different in cost from a mediation starting at 8:30 a.m. and running to midnight; in fact, the former structure is likely to be more cost-effective and successful because the parties will be less fatigued and likely to make better and quicker decisions.  What is important in multiple session mediations is shaping the parties’ expectations for reasonable stopping times and identifying good points in the negotiation for breaks.

6.    If you have not come to the mediation armed with a draft Settlement Agreement, use the ‘dead’ time during mediation, when you’re waiting for a response from the opposing party or when the mediator is otherwise occupied, to begin to draft detailed settlement terms that can be shared with the opposing side during the mediation itself. Rather than crafting an agreement in its entirety, look at those terms that are complicated and which will need precise articulation. Involve your client in the drafting and make an exchange of language part of your negotiation at the mediation.

a)    If you arrive at a settlement and, again, if you have no draft Settlement Agreement or collection of term sheets as I have suggested above, then prepare a detailed, handwritten  outline of terms, which sets forth the key points of agreement and which is signed by the parties.  If it’s already late in the day, if both fatigue and frustration are setting in and if the deal struck is complex, it’s sometimes wise to do a very short list of terms and then to schedule a several hour session either for the next day or the very near future, either for the parties to meet in person or to have all necessary persons accessible by conference call to conclude these matters.  Again, this may sound to some like additional or unnecessary expense, but as anyone who has been involved in protracted post-settlement negotiations can attest, a more streamlined process is cost efficient.

Conclusion

What all this advice adds up to is more of the First Commandment for Lawyers at Mediation:  Thou Shalt Be Prepared.  Far too often, even counsel who are prepared for the mediation process and who are armed with a negotiation strategy have not found the time or taken the trouble to develop a closure strategy.  Practice some of the steps outlined above and you are guaranteed to get better settlements, faster closure and to have happier clients.

Dorsey & Whitney

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